The Eurozone ZEW Survey improved to 40.8 in January, surpassing both the estimate of 35.2 and December’s reading of 33.7. The German ZEW Survey for Economic Sentiment also rose to 59.6, above the predicted 50.0 and the previous 45.8.
The survey’s Current Situation index, which indicates investor sentiment shifts, increased to -72.7 from December’s -81.0, exceeding expectations of -75.5. Despite these changes, the Euro’s (EUR) market reaction remains minimal, but EUR/USD is up by 0.7%, trading near 1.1730.
Today’s Euro price performance against major currencies shows a strengthening against the US Dollar, with a 0.70% increase. Among the major currencies, the Euro demonstrated varied performance, as reflected in the percentage changes in the table.
The heat map explains these shifts clearly, using the base currency from the left column against the quote currency from the top row. For instance, EUR/USD shows the percentage change where Euro is the base and USD is the quote currency.
We remember this time last year, in January 2025, when a strong ZEW survey showed a big jump in investor confidence. That positive sentiment helped lift the Euro against the dollar. Now, on January 20, 2026, we are watching for similar signals in a more complex environment.
This year, the economic picture is more mixed, as recent Eurostat data shows headline inflation has cooled to 2.3%, much closer to the European Central Bank’s target. However, industrial production figures from late 2025 showed a slight contraction of 0.2%, suggesting underlying weakness. This creates uncertainty about the path of future interest rate decisions.
This situation suggests a different options strategy than what we saw in 2025, when outright bullish call options on the Euro made sense. With the current economic data sending conflicting signals, implied volatility on EUR/USD options has been rising. Traders should consider strategies that profit from this volatility, such as straddles or strangles, ahead of the next ECB meeting.
Looking back, the Euro pushed towards 1.10 against the dollar after the positive data in early 2025. Currently, with EUR/USD trading around 1.0950, futures markets are not pricing in any aggressive rate cuts from the ECB. This suggests range-bound trading might be the theme for the coming weeks.
Unlike the clear optimism of early 2025, traders are now more focused on hedging their downside risk. Buying out-of-the-money put options on the Euro offers a relatively inexpensive way to protect portfolios against any unexpectedly weak growth data. This defensive positioning is a notable shift from the sentiment we observed last year.
